Resource curse impacts on the co-evolution of emerging economy institutions and firm internationalization

We investigate natural resource “curse” impacts on co-evolutionary relationships between emerging economy institutions and firm internationalization. We discuss how these relationships challenge and extend IB institutional research using three predominant resource curse characteristics (boom and bust cycles with related public discourse and “Dutch Disease” with associated manufacturing sector investment crowd-out). These characteristics alter regulative, normative and cognitive institutional impacts on state- and privately-owned firm internationalization during an emerging economy’s resource curse. We develop propositions describing these processes using oil and gas, manufacturing and service sector examples in several emerging economies. We discuss our theoretical contributions to the resource curse and international business literatures and outline future research directions.     

Ownership structure and earnings management in emerging markets—An institutionalized agency perspective

Previous earnings management research has largely focused on firm-level governance mechanisms in single countries or on macro-level variables in multiple countries. Building on this research, we incorporate firm ownership predictors along with national institutional dimensions to explore why firm decision makers in emerging markets vary in their earnings management behavior. Our theoretical framework integrates agency and institutional theories proposing that firm-level ownership mechanisms do not function in isolation, but are reinforced or attenuated by elements of the institutional governance environment. The multilevel empirical analysis of 1200 firms in 24 emerging markets indicates that controlling ownership is positively related to earnings management. We find that the level of minority shareholder protection in a country weakens this positive relationship. We also find that regulatory quality strengthens the negative relationship between institutional ownership and earnings management activity. It is hoped that awareness of how firm ownership structures interact with national-level institutions in affecting firm-level behavior will help managers and investors develop skills and practices to better cope with business norms in emerging economies.     

The internationalization of entrepreneurial firms from emerging economies: The roles of institutional transitions and market opportunities

This paper examines the influence of institutional transitions and market opportunities in emerging economies on the internationalization of entrepreneurial firms from these economies. We conceptualize and examine a three-stage model of institutional transition in emerging economies, and their effects on the internationalization strategies of new venture firms. Propositions are developed in examining how the different stages of the institutional transition can influence the strategic choices for the internationalization of new venture firms. In responding to the calls for more research on institutions and international entrepreneurship, this paper is an attempt extending the linkages between the two to the context of emerging economies. The paper also has managerial implications for entrepreneurs and the associated policy implications in international entrepreneurship.     

When social movements close institutional voids: Triggers,processes, and consequences for multinational enterprises

Our research builds on existing literature examining institutional voids in emerging economies. Using data from two cases of mining FDI in Argentina, we conceptualize the triggers, processes and consequences of informal institution-building by a social movement. We found the cases to exhibit different ‘community sustainability orientations’, enabling two contrasting strategies, ‘bargaining’ and ‘gatekeeping’, to address the existing institutional void. This led to the development of new formal institutions – regulated CSR for the former and legal ban on mining operations for the latter case. Our study thus offers insights into the processes through which institutional entrepreneurship by social movements influences MNEs.     

De-industrialisation,comparative economic performance and FDI inflows in emerging economies

We address calls to incorporate comparative political economy considerations into IB scholarship. In particular, we conceptualise and test empirically the hitherto unexplored relationship between de-industrialisation and relative performance of groups of countries, and FDI inflows in emerging economies. Using a panel dataset over the period 1996–2004 and employing conceptual and methodological innovations (not least the use of comparative independent variables), we find support for the ideas that relative de-industrialisation of developed economies will increase FDI inflows into emerging economies, while the relative under-performance of developed countries will reduce it. We also find that divergence in business cycles-de-coupling between the two groups of countries fosters FDI inflows in emerging economies. These help explain and predict recent changes in the global business landscape and inform public policy and managerial practice.     

Injecting demand through spillovers: Foreign direct investment,domestic socio-political conditions,and host-country entrepreneurial activity

This study examines how foreign direct investment (FDI) spurs entrepreneurial activity in host countries. We also investigate why this relationship varies across countries because of domestic socio-political conditions. The findings from our panel analyses of 104 countries from 2000 to 2009 are consistent with our predictions that foreign direct investment positively relates to business creation and this positive effect is strongest in countries with poor institutional support, weak political stability, and low general human capital. Our work provides new insights into how cross-border investments and domestic socio-political conditions jointly influence entrepreneurial activity, especially in emerging and developing economies.     

International ambidexterity and firm performance in small emerging economies

Conventional IB theories stress the importance and implications of a firm's exploitative strategy. However, the unprecedented competitive nature of contemporary business necessitates firm “ambidexterity” — the simultaneous execution of exploitation and exploration activities. Using balanced panel data of 207 Taiwanese firms spanning six years, this research examines the effects of international ambidexterity on firm performance. Findings reveal that ambidexterity promotes a firm's performance. For firms from small emerging economies, international ambidexterity is highly vulnerable to environmental complexity and sensitive to previous international experience and the firm's capability to conduct international business. These factors significantly moderate firm performance.     

Engaging informal institutions through corporate political activity: Capabilities for subnational embeddedness in emerging economies

This study examines how multinational enterprises (MNEs) organize internally to enhance subnational institutional fit in new frontier developing economies. We consider how corporate political activity (CPA) can facilitate local embeddedness by engaging informal institutions and nonmarket stakeholders at local community level. We apply an exploratory, qualitative, multi-case study approach to six MNEs in Uganda’s electricity generation sector. The findings suggest that in markets like Uganda, MNEs depend on being bridged with subnational informal institutions such as tribal, social, and religious norms and grassroots political networks. Such bridging in turn positions these MNEs to contribute to developmental processes by integrating recognizable informal institutions into grassroots projects.Drawing on institutional theory and an organizational capabilities perspective, we identify the diverse bridging capabilities that enable MNEs to successfully embed locally, thereby simultaneously pursuing business objectives and achieving societal relevance.     

Causal mechanisms of COVID-19 disruptive effects on liability of foreignness and the emergence of new firm-specific advantages

There is the need for comprehensive research on the disruptive effects of COVID-19 on international business (IB) in preparation for future disruption. However, we know little about the causal mechanisms of the phenomenon which impacted IB. Based on a case study of a Japanese automotive firm in Russia, we investigate how firms tackle institutional entrepreneurship with firm-specific advantages to overcome the disruptive effects. Consequently, the pandemic increased institutional costs due to greater uncertainty in Russian regulatory institutions. To manage this, the firm developed new firm-specific advantages to deal with the increasing uncertainty of regulative institutions. The firm united with other firms to motivate public officials to advocate for semi-official debates. Our study contributes to extending intersecting studies on the liability of foreignness and firm-specific advantages through the lens of institutional entrepreneurship. We propose a holistic conceptual process model of the causal mechanisms and a novel construct for new firm-specific advantages.     

Mapping international business and international business policy research: Intellectual structure and research trends

This paper analyzes the core international business (IB) areas covered by ten IB-focused journals to date using 13,937 documents reflecting more than 300 years of combined publication history. Using bibliometric and citation analysis, it provides a systematic understanding of the current IB landscape, explicates the relevance of the future of IB research and depicts trends in this research field with emerging prevalent themes identified. The strongest themes across IB journals are performance, perspective and emerging economies/MNEs, shared strongly across UK/Europe, US and Asia-based journals. Our findings report on the prevalent research field, economy and geography, the latter analyzing the impact of author numbers and distribution, and thus, scale effects. Within this context, sole authorships are largely replaced by co-authorships, yet often on national level. We further limited the study to IB policy and found the focus centers on key themes of foreign business attraction, transnational governance and IB promotion.     

A cross-country investigation of micro-angel investment activity: The roles of new business opportunities and institutions

Building on international business literature and institutional theory, we examine the joint roles of new business opportunity availability and key formal and informal institutions in a country for explaining the incidence of micro-angel investment activity. Micro-angel investments should increase to the extent that countries demonstrate (1) greater availability of new business opportunities, (2) more protective legal systems, and (3) stronger embeddedness of members in interrelationships. More protective legal systems and stronger embeddedness also may play moderating roles, such that they amplify the relationship between the availability of new business opportunities and the incidence of micro-angel investment activity. Finally, legal protection and embeddedness can substitute for each other, such that the effect of one becomes suppressed at higher levels of the other. Data drawn from different cross-national data sources support these hypotheses. This study is among the first to explain cross-country differences in micro-angel investment activity.     

Foreign direct investment,institutional quality,economic freedom and entrepreneurship in emerging markets

This study investigates the relationship between foreign direct investment, institutional quality, economic freedom, and entrepreneurship in emerging markets. The research compares the capacity and appetite for business creation among high-income, low-income and emerging countries. The results are based on a panel study of data, from 2004 to 2009 for 87 countries, using as its source “The World Bank Entrepreneurship Snapshots” to look at the connection between business creation, institutional quality, market freedom and foreign direct investment (FDI). The findings reveal a strong positive relationship between institutional quality and business generation in all three of the above categories. The freedom to create businesses and invest has an impact on business generation in emerging countries, while the influence of international trade appears more important as a spur to the genesis of business in low-income countries. Finally, there is a direct and significant relationship between FDI and business development in emerging countries. This result is consistent with “the spillover theory of entrepreneurship” (,  and ).     

Limits to learning from the west: How western management advice may prove limited in Eastern Europe

The West's aid to the emerging Eastern European economies includes consultancy and education. This will have considerable impact on their economic and managerial activity, even though the theories of organization and management on which it is based are much criticized here. As these theories are applied in the extreme economic, social and political circumstances of the Soviet collapse, we are likely to be both surprised and pushed into a period of critical organizational theorizing. Much of the criticism comes from institutionalists who reject a generic approach to economics and management. They argue instead that organizations are embedded within a specific environment of social, legal, economic, and technological institutions which fashion their activities. They are saying “things are different over there and we should recognize that our advice presumes our own institutional arrangements.” The first part of this study reviews the reasoning behind this critique. It has two threads: (a) the institutional context and the way that shapes economic transactions and their costs; and (b) the way institutions develop as collective responses to social uncertainties. We look at organization theory's dependence on the social institutions, such as contract law, professional training, and the market for insurance. We take these and many other Western institutions for granted, and seldom stop to analyze them. In Eastern Europe, managers lack such institutional infrastructures and face uncertainties beyond our experience. This article's second part focuses on the processes by which organizations respond to uncertainties. There are many types of uncertainty and we pick out that of adopting a new technology. Problems arise because of “gaps” between the organization's in-place work practices, knowledge, and attitudes, and those which they must eventually adopt if they are to use the new technology effectively. Recent research into workplace know-how suggests that such gaps are bridged by workers developing a new “tacit” understanding of the technology through learning-by-doing. This knowledge generation (KG) works best when it is also communal, when creative teams form. By definition, this kind of team cannot be managed bureaucratically, in ways that depend on an understanding of the task in hand. We see that bureaucracy is a theory of knowledge application (KA) which breaks down in the absence of the necessary knowledge, rules, measurements, communications, and sanctions. Creative teams can operate under the conditions of bureaucratic failure because they are held together by institutional forces rather than by rational administration. The context of social institutions outside the organization becomes important because it defines the institutional bases for such teams. In the final section we look beyond creative teams as internal uncertainty resolvers. The new institutional economists argue that firms should internalize the uncertain transactions that are difficult to contract, and so precipitate market failure. We suggest that entrepreneurs also look outside the firm at those social institutions which enable them to externalize uncertainties. In general, the institutionalist critique reveals that entrepreneurs have several domains of action. The formal KA part of the firm, the focus of classical organization and management theory, is but one of these domains. Other equally important KG domains lie both within the firm and in the interorganizational networks and social institutions beyond its boundaries. The uncertainties of the Soviet collapse move us on from the simplicities of Western organization theory toward a richer set of ideas more relevant to our Eastern European colleagues—and to ourselves.     

Following their predecessors’ journey? A review of EMNE studies and avenues for interdisciplinary inquiry

In this review article we take stock of international business (IB) research on emerging economy multinational enterprises (EMNEs) over the past three decades. Our review covers 690 articles published in 64 high-impact peer-reviewed journals between 1990 and 2021 (inclusive). We first present bibliometric findings on some key patterns of this vast body of scholarly work. We then conduct content analysis to critically assess this literature and provide a multilevel synthesis of the existing knowledge base. To do so we propose a theoretical framework that highlights three dimensions – micro-foundations, organizational characteristics, and institutional environment – by which the distinction between EMNEs and their predecessors, namely multinational enterprises (MNEs) from advanced economies, is investigated. At each level, we seek to understand EMNEs’ convergence with and divergence from their predecessors in terms of their motives, strategies/approaches, and outcomes of internationalization. Through this process we identify opportunities to move EMNE research forward through interdisciplinary inquiry, and we propose several avenues for future research.     

How Institutions Influence SME Innovation and Networking Practices: The Case of Vietnamese Agribusiness

This paper addresses impacts of the institutional framework on small and medium‐sized enterprise (SME) innovation and networking practices. Through an explorative study of a domestic SME‐dominated sector in Vietnam, we find that the institutional framework limits incentives for long‐term investments, resulting in exploitative cost‐control strategies rather than product‐oriented innovation. Due to dominating social norms, SMEs form trust‐based friendship networks, potentially limiting knowledge acquisition and weakening business rationality. Institutional pressures reinforce negative influences on SMEs' incentives to develop innovation ambidexterity. The findings suggest that new institutional economic sociology provides a promising foundation for understanding how institutional frameworks influence SMEs' innovation practices in emerging economies.     

Emerging‐Market Firms Venturing into Advanced Economies: The Role of Context

Sociocultural, economic, political, and institutional differences between countries increase uncertainty and complexity in today's highly competitive international business environment. Moreover, the “West‐Leads‐East” to “West‐Meets‐East” shift in the global economy requires firms in both advanced economies and emerging markets to seek sustainable solutions by collaborating across geographic boundaries. Such novel collaborative partnerships may help build a stable, resilient, and sustainable world economy by leveraging the resources and capabilities of firms from both advanced and emerging economies. This article has three general objectives. First, we seek to show that context has been a long‐standing issue in management, organization, and international business research and provide an overview of the puzzles that informed and motivated this special issue. Second, we highlight the key insights and contributions of the articles included in this special issue by reviewing their theoretical underpinnings, methodological approaches, and empirical findings. Finally, we outline a future research agenda on emerging‐market firms venturing into advanced economies that can help advance international business and management studies. © 2017 Wiley Periodicals, Inc.     

An Exploratory Cross-Cultural Analysis of Marketing Ethics: The Case of Turkish,Thai, and American Businesspeople

Although a number of studies have shown that corporate social responsibility (CSR) activities often lead to greater organisational performance in western developed economies, researchers are yet to examine the strategic value of CSR in emerging economies. Using survey data from 280 firms operating in Dubai, this study examines the link between CSR activities and organisational performance. The results show that CSR has a positive relationship with all three measures of organisational performance: financial performance, employee commitment, and corporate reputation. These results reinforce the accumulating body of empirical support for the positive impact of CSR on performance and challenge the dominant assumption that, given the weak institutional framework in emerging economies, CSR activities drain resources and compromise firms’ competitiveness.     

Are Group-Affiliated Firms Really More Profitable than Nonaffiliated?

The role of corporate center in influencing the economic performance of business units has been a central research topic in the industrial organization and strategic management literature. A common finding is the limited corporate and business group effects. Recently, an emerging line of studies argues that the market inefficiencies and institutional voids in emerging markets can be overcome more efficiently by large diversified business groups than by non-group small firms. Some empirical evidence also shows that non-group small firms are significantly less profitable than group-affiliated firms. This paper raises this issue by empirically investigating the influence of group affiliation on the return on assets and Tobin's q of 340 group-affiliated firms versus 423 non-group firms in Taiwan, during the period of 1997–1999. The statistical results show that group affiliation can not always create value for member firms. The size of the business group matters. When affiliated with the largest business groups, member firms indeed show improved stock market performance, but when firms are affiliated with small- and medium-sized groups, their accounting performance suffers. Findings of this paper suggest a threshold effect and a U-shape relationship between group affiliation and profitability in emerging economies.     

The Signaling Effect of Corporate Social Responsibility in Emerging Economies

What signals do firms in emerging economies send to stakeholders when they adopt corporate social responsibility (CSR) practices? We argue that in emerging economies, firms that adopt CSR practices positively signal investors that their firms have superior capabilities for filling institutional voids. From an institution-based view, we hypothesize that the institutional environment moderates the signaling effect of CSR on a firm’s financial performance. Based on a sample of firms from ten Asian emerging economies, we find a positive relationship between CSR practices and financial performance. This positive relationship is stronger in the less developed capital market than in the more developed one. The financial benefits of CSR practices are also more salient in the low information diffusion market than in the high one. We emphasize that signaling theory and the institution-based view can jointly contribute to the CSR literature.